The Financial Accounting Standards Board (FASB) voted unanimously to overhaul the accounting rules for exchange-traded digital assets in the United States. This could have a significant impact on companies looking for a regulatory way to get around cryptocurrencies better manage their balance sheets.
Celebration among Bitcoiners
Microstrategy CEO Michael Saylor claimed the result of the vote was 7-0 on Wednesday via Twitter. Although the official outcome is yet to be released by the board itself, the FASB’s website shows that a discussion on accounting for digital assets was indeed scheduled for May 11. The discussion itself was streamed live this morning, but archive footage of the meeting has not been uploaded.
Saylor congratulated the Bitcoin-Community to the result. He and many bitcoiners anticipate that this could result in a friendlier accounting framework for institutional bitcoin investing.
“That’s amazing,” replied Kraken’s Director of Progress Advertising, Dan Held. “One step closer to making it easier for companies to own Bitcoin on their balance sheet and account for it in a compelling way.”
Benefits for Institutions
Currently, companies are required to report their bitcoin holdings at the lowest price during a given reporting period. In other words, if Bitcoin oscillates between $40,000 and $30,000 in a few months, companies must report their holdings at $30,000 even if they end up closer to $40,000 at the end of the period.
This can negatively impact the earnings report of a company holding bitcoin on its balance sheet. Such was the case with MicroStrategy, which reported a Bitcoin value of $1.1 billion at the end of 2020, despite holding a value of $2 billion through December 31st.
According to the FASB’s meeting paper, it initially declined to add accounting for digital assets to its technical agenda. Since then, however, three agenda requests have been received on the issue, including one from seven congressmen in May last year.
It is still unclear when exactly the FASB will review its accounting rules or issue new guidance.
Source: Crypto News Deutsch